BSP backs lifting of bank secrecy for tax purposes

The lobby for Congress to lift bank secrecy for tax purposes received an additional boost from the Bangko Sentral ng Pilipinas (BSP), which has joined the Department of Finance (DOF) in pushing for the measure.

In a statement on Wednesday, the DOF quoted Finance Secretary Carlos Dominguez III as saying that the BSP “wants to get involved in efforts to convince Congress that lifting the bank secrecy law is a crucial and indispensable part in the grant of amnesty to erring taxpayers.”

The DOF said the BSP’s position was made known by Governor Benjamin Diokno to Dominguez.

Dominguez directed Finance Undersecretary Gil Beltran to make sure that Congress would know the joint DOF-BSP position pushing for general tax amnesty only with the lifting of bank secrecy—“they have to be together.”

In February, President Duterte signed into law a part of tax reform package 1B under Republic Act No. 11213, or the Tax Amnesty Act of 2019, which paved the way for the ongoing estate tax and delinquencies amnesties.

The DOF had estimated additional revenues from the one-year amnesty on delinquencies to reach P21.26 billion.

Estate tax amnesty, meanwhile, was expected to generate P6.28 billion during its two-year implementation.

However, Mr. Duterte vetoed the general tax amnesty pending the lifting of bank secrecy for tax purposes as without safeguard, such “would only lead to revenue losses for the government and encourage tax evasion,” the DOF said.

“The President was constrained to veto the portion of the law covering the general amnesty because of the lack of provisions breaking the walls of bank secrecy, setting the framework for complying with international standards on exchange of information, and other safeguards against those who abuse by declaring untruthful assets or net worth,” Dominguez said.

“Had the President not vetoed the general tax amnesty provision, the law would raise only P6.8 billion in additional revenues in 2019, lower than the estimated P13.6 billion if lifting bank secrecy and allowing the automatic exchange of information were already in place,” Dominguez added.

“Indirect revenue losses resulting from enforcement activities would be around P53 billion if the general tax amnesty had pushed through without the safeguards. Lifting bank secrecy and allowing the automatic exchange of information, however, would have generated up to P76.6 billion in direct and indirect revenues in the next five years,” according to Dominguez.